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The Solar Tariff Case: What You Need to Know

On Monday, January 22, President Trump announced a new tariff on imported solar panels and cells under the guise of protecting American jobs. Here’s the story behind the story and why the real winner in the case is the fossil fuel industry – and the loser is the rest of us.

It would’ve been easy to miss. Buried beneath all the headlines about the Senate budget deal on January 22 was another story involving President Trump with major implications. This one was about the president announcing he was imposing a 30 percent tariff on imported solar cells and modules to protect American manufacturers and workers from Chinese companies.

If you heard the story but don’t spend every day reading Bloomberg New Energy Finance (and to be clear, serious love in their direction) or navigating white papers in the energy policy world, chances are your reaction boiled down to some variation on two questions. First, what gives? Second, does this really matter?

In a nutshell, first, it looks a lot like a president who loves fossil fuels has used a trade case to take aim at the renewable energy sector in the US.

Second, yes. This is a big deal for those of us who happen to like the planet we live on. Read on for more.

What’s Behind the Decision?

The announcement reflects the president’s decision on a case brought by two solar panel manufacturing companies, SolarWorld and Suniva, to the US International Trade Commission (ITC). The companies were unsuccessful in the open market (Suniva filed for Chapter 11 bankruptcy in 2017) and petitioned the ITC for import relief last April under Section 201, a rarely used provision of the 1974 Trade Act. At the heart of the case was the claim that cheap imports of solar panels, particularly from China, meant they couldn’t compete.

In an earlier study, GTM researchers found that the biggest hit from a 30 percent tariff would come to the utility-scale solar sector, which is the most sensitive to price increases. Every corner of the sector will feel it, though. In the residential solar sector, the states with the largest markets (e.g., California) will likely see the most damaging impacts in terms of the sheer numbers of installations affected. But for other states that are just beginning to develop vibrant residential solar sectors –Southern states like Texas and South Carolina, for example – the tariffs could bring that momentum to a grinding halt – or cause the markets to disappear almost entirely.

Here’s What’s Weird about This One

It’s not a contest, really – but it’s definitely is worth noting that America’s fastest-growing jobs are in clean energy. pic.twitter.com/OwPJMfOqEj

The president framed his decision as a blow at Chinese trade practices and a move to protect American jobs (you might have heard this “America First” line somewhere). But take a closer look at what it will actually do and it becomes clear that the numbers just don’t add up.

Witness. According to The Solar Foundation’s National Solar Jobs Census, there were roughly 38,000 Americans working in solar manufacturing in 2016 – and only 2,000 of them work on making the panels and cells the tariff covers. The number bears repeating: 2,000 jobs.

The real impact is going to come to the thousands and thousands of Americans who work in other areas of the industry – installers, for example – who could see their jobs disappear as demand slows. According to the Solar Energy Industries Association (SEIA), the industry’s trade group, the decision will cost roughly 23,000 jobs this year alone. That also bears repeating: the president’s decision will cause about 23,000 Americans to lose their jobs – just in 2018.

Oh, and that “America First” thing? Turns out Suniva was 63 percent owned by Chinese investors. SolarWorld’s parent company, meanwhile, is German. Nothing wrong with foreign ownership, of course, but it points to another way the administration’s claims just don’t add up.

As SEIA President and CEO Abigail Ross Hopper put it, “While tariffs in this case will not create adequate cell or module manufacturing to meet US demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately costs tens of thousands of hard-working, blue collar Americans their jobs.”

Bottom line: the new solar tariff will make solar more expensive in the US and cost American jobs. All while failing to spur more domestic manufacturing and slowing our response to the climate crisis. That’s bad for American workers, bad for the economy, and bad for our planet.

Great news for fossil fuel companies, though – and that’s who the real winners are here.